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Peru - The Curse of Inca Gold

 


Related Features THE STORY
Synopsis of "The Curse of Inca Gold"

WEB EXCLUSIVE:
MONTESINOS'S WEB
The high-stakes battle to control the world's richest gold mine.


ALL THAT GLITTERS
Gold's place and power in society

THE TOXIC SHIMMER OF GOLD
The environmental costs of gold mining

FACTS & STATS
Peru's rich history and natural resources

LINKS & RESOURCES
From the Conquistadors to President Fujimori's reign

MAP

REACT TO THIS STORY

 


Interviews and bios of the key players:

VLADIMIRO MONTESINOS

LARRY KURLANDER

ROBERT CHAMPION DE CRESPIGNY

PATRICK MAUGEIN

ROQUE BENAVIDES

RONALD GAMARRA

PETER ROMERO

ANTOINE BLANCA


THE PLAYERS
Meet the players in the battle for the world's richest gold mine

THE DOCUMENTS
Text and scanned versions of documents relevant to the Yanacocha case

THE TIMELINE
The timeline of events in the the largest commercial dispute in Peruvian history

 
 

Montesinos's Web: Timeline

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The dispute to control the world's richest gold mine became the largest commercial dispute in Peruvian history. This timeline shows how events in the case unfolded.

The battle for ownership of the Yanacocha mine involved four companies: Newmont Mining, an American company; Buenaventura, a Peruvian company; Bureau de Recherches Géologiques et Minières (BRGM), a French-government owned company, and Normandy Mining, an Australian company.

 

1992

BRGM, Buenaventura, and Newmont form a joint venture to develop the mine. According to BRGM, Newmont, based in Denver, Colorado, is the only company with the heap-leaching technologies needed to mine Yanacocha's very low-grade deposits. The partnership is formed.

1994

BRGM restructures its worldwide mining assets, essentially privatizing them. As part of this plan, it looks for a strategic partner to buy a portion of its shares in Yanacocha. The French company doesn't want to sell its shares outright but rather is looking for a partner that will help it create an integrated international mining company through a holding company. It chooses an Australian company, Normandy Mining, a major competitor of Newmont.

After BRGM informs Newmont and Buenaventura of its plans to bring in Normandy, Newmont and Buenaventura sue to stop the sale. This sparks a four-year legal battle that will become the largest commercial dispute in Peruvian history.

In the lawsuit, Newmont seeks to acquire BRGM's entire share of the mine (24.7 percent) for itself and its Peruvian partner, Buenaventura. At the time of the suit, Newmont Mining owns 38 percent of the mine; Buenaventura 32.3 percent; and the International Finance Corporation, the investment arm of the World Bank, holds the remaining 5 percent.

For the next two years, the stakeholders drag the dispute through the Peruvian lower courts.

1996

In September 1996, a Peruvian circuit court awards BRGM's shares in the mine to Newmont and Buenaventura for $109.7 million. The figure is set at the 1993 value of the shares and is a fraction of the mine's then estimated and escalating worth. Yanacocha has by now been identified as a major gold strike, possibly the most lucrative in the world.

With a lower-court ruling against them, BRGM and Normandy ask the Peruvian Supreme Court to review the decision. Robert Champion De Crespigny, Normandy's chairman and CEO, turns to a well-connected French businessman, Patrick Maugein, for help in overturning the decision. Maugein's connections go all the way to the French President Jacques Chirac.

1997

In September 1997, the Peruvian Supreme Court agrees to review the Yanacocha case -- one that Newmont thought it had definitively won.

1998

Four months later, in January 1998, Peru's Supreme Court reaches a decision -- 3 to 2 in favor of the French but one vote shy of a victory for Normandy and BRGM. [In Peru's highest court, four votes in agreement are needed to reach a decision.] An additional judge is appointed to the case.

In May 1998, a sixth Supreme Court justice assigned to the case votes in favor of Newmont and Buenaventura, deadlocking the case at 3-3. With one vote still needed, the court appoints Judge Jaime Beltrán Quiroga as a final judge in the case. Soon after his appointment, Beltrán is summoned by Peruvian spymaster Vladimiro Montesinos to his intelligence headquarters to discuss the case.

In a secretly recorded videotape of this meeting (watch the excerpt here in "Fixing the Court"), Montesinos tells Beltrán the French have been behaving in an "outrageous" fashion to try to manipulate the case. While Montesinos doesn't directly pressure the judge, he does remind him that as a Peruvian, national interests are at stake in siding with the Americans (Newmont) in the Yanacocha case. He explains to Beltrán that the United States is a key guarantor in a long-standing border dispute between Peru and Ecuador, which must be resolved -- with the help of the United States -- by the end of the month.

Following his meeting with Montesinos, Beltrán casts the final Supreme Court vote in favor of Newmont and Buenaventura, awarding them BRGM's share. The decision upholds the lower court ruling that set the price at $109.7 million. The French and Australians have lost their entire interest in the mine, now worth an estimated $500 million.

In September 1998, in what a U.S. embassy cable later characterized as "one last desperate attempt to reclaim the shares," BRGM files a $560 million claim against the Peruvian government with the International Centre for Settlement of Investment Disputes (ICSID), an affiliate of the World Bank, under the terms of the 1993 Peru-France Bilateral Investment Treaty.

2000

Two years after the Supreme Court rules in favor of Newmont and Buenaventura, the dispute is definitively resolved. Newmont pays an additional $80 million in cash and stock to BRGM and Normandy. As part of the settlement, all pending litigation and arbitration claims are dismissed, including BRGM's claim against the Peruvian government.

 

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